Malaysia’s Military Set to Go Shopping

Malaysia’s Prime Minister Najib Razak (center) is pictured with Australian Air Force Group Commander Craig Heap (left) and Royal Malaysian Air Force mission Commander Major Jafri as they watch a C-130 involved in the search for Malaysia Airlines MH370.

The Malaysian military is looking for solutions to its most urgent capability problems, exposed in part by the disappearance last month of Malaysia Airlines Flight 370.

That’s likely to impact the country’s annual defense exhibition, which brings defense suppliers from around the world to Kuala Lumpur this week. The event, Defense Services Asia, or DSA, is usually something of a byway for the global arms industry, simply because Malaysia has never been a big spender when it comes to military kit.

But with the country’s armed forces under scrutiny for their failure to track the Malaysia Airlines jet on the morning of March 8, and its limited ability to lead the search forcing it to cede some authority to Australia, China and the U.S., the complexion of this year’s event will likely be different.

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The dividend for its dented national pride could be significant defense investments, as the government comes under political pressure to fund military improvements which, critics say, it should have expedited years ago. The trick will be finding a way to make those investments happen without imposing delays on other priorities unrelated to the loss of Flight 370.

Another challenge: limited finances at a time when Kuala Lumpur is trying to implement budget cuts. Malaysia’s defense budget for 2014 is roughly $5 billion – modest even by Southeast Asian standards – and only $1 billion of that is likely to be available for new equipment.

Here are five items the Malaysian military will likely be looking for this week:

Maritime patrol aircraft

Malaysia’s air force has been asking for new patrol planes for some time, with Air Force Chief General Rodzali Daud publicly reiterating his request only last week. Now, given how useful they would have been in the search for Flight 370, Mr. Rodzali is likely to get his wish in the form of six to 12 aircraft. One possible purchase is the CN325, developed in Indonesia with the help of European aerospace giant Airbus. The ATR 72MP, made by Alenia Aermacchi of Italy, is another strong contender. Total cost: $150-300 million.

Early warning aircraft

The loss of Flight 370 also exposed the seemingly porous nature of Malaysia’s air defense cover. New early warning aircraft – which are essentially flying high-powered radar systems – would help to plug the gap. Saab of Sweden is trying to market its Saab 340 to Malaysia as both a maritime patrol and early warning aircraft combined. That would enable the air force to meet two needs with one aircraft – if it feels the Swedish plane can adequately perform both functions. The Northrop Grumman E-2D Hawkeye, a mainstay of the U.S. Navy, could pose strong competition, however. Though the aircraft is likely to be more expensive, it is also understood to have a more powerful radar set. Total cost: $250-750 million.

Multirole combat aircraft

The Malaysian air force’s quest for up to 24 new fighter jets took a surprising twist last month, when Malaysia said it wanted to lease the planes, rather than buy them outright. The leasing of modern fighter planes is rare, and is only done currently by one manufacturer: Sweden’s Saab, which rents out its Gripen fighter to some of its European customers. That could give Saab an advantage over its main rivals Eurofighter and Boeing – especially if the fighters are bundled together with the early warning planes (Saab has already sold this exact same package to Thailand). However, U.S. President Barack Obama is arriving in Malaysia later this month, and he’s expected to try to persuade Prime Minister Najib Razak to buy American, making Boeing’s F/A-18 Super Hornet a strong contender. Total cost: unknown, depending on length and terms of lease.

Marine corps training and equipment

Malaysia has maintained a calm front amid recent territorial disputes in the South China Sea, but the decision to establish a new marine corps, announced late last year, was a sign of Kuala Lumpur’s growing sense of unease about China’s regional claims. Amphibious ships and vehicles, as well as attack helicopters, will all be needed to assemble the new corps. The strong U.S. Marine presence at this week’s DSA – with Marine Commandant General James F. Amos expected to personally attend – may signal U.S. interest in helping Malaysia train its new Marines, and also sell them the kit needed to help them to operate.

Supplies to support new Sabah army division

Malaysia resolved to boost its defenses in East Malaysia following an incursion into Sabah state by Sulu-based militants in early 2013. The goal is to raise a new army division that would be based in Sabah – a huge undertaking for an army that only has four divisions currently. Army commanders confirmed in early April that plans for the new division were still on, but would take time, planning – and procurement. Supporting an army division requires a lot of equipment of all sorts, and both foreign and domestic military suppliers will be working hard at DSA to make the best sales pitch for their goods.

About Southeast Asia Real Time

Indonesia Real Time provides analysis and insight into the region, which includes Singapore, Thailand, Indonesia, Vietnam, Malaysia, the Philippines, Myanmar, Cambodia, Laos and Brunei. Contact the editors at SEAsia@wsj.com.

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